Why a repeat of the 2008 financial crisis is not likely yet

Things may be looking grim for markets, but it is certainly not time to panic just yet. Central banks are under no pressure to respond and will be watching, waiting and seeing how things pan out as the markets continue to blow off steam. Sure, there is some pretty bad news out there, but we are still in the domain of market correction, rather than outright global carnage.

It is a time for steady heads and calm reaction rather than hitting the exits and hunkering down for the coming storm. There is even a good case building for bargain hunting when the correction blows over. The key is when.

Global stocks may be heading for their worst losing streak in seven years with losses on MSCI’s all-country index down around 15 per cent from January’s peaks, but this is far from a rout. Trade war worries, Italy’s budget storm and China slowdown fears may seem serious, but there is no systemic collapse in sentiment on par with the 2008 crash.

There is still good news out there. Steady global expansion is running at around 3.7 per cent, according to the latest forecasts from the International Monetary Fund. America’s economy is steaming along at full employment, with the jobless rate close to a 50-year low. And China’s economy, far from being........